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June 06, 2005
Checking in on Krispy Kreme
It's been awhile since we have checked in on the travails of Krispy Kreme Doughnuts, Inc. (earlier posts here), so it seems appropriate to pass along this CFO.com article that does a good job of summarizing the mistakes that the once-trendy franchisor made in quickly expanding beyond its Carolina roots:
How could a company in business for nearly 70 years, with an almost legendary product and a loyal customer base, fall from grace so quickly? The story of Krispy Kreme's troubles is, at bottom, a case study of how not to grow a franchise. According to one count, there are at least 2,300 franchised businesses in the United States, and many are extremely successful. But there are pitfalls in the franchise model, and Krispy Kreme — through a combination of ambition, greed, and inexperience — managed to stumble into most of them.
And what's the solution for this troubled company? It's really quite simple. As one commentator observed:
"They need to emphasize the hot-doughnut experience, rather than the cold, old doughnut in a gas station."
Posted by Tom at June 6, 2005 05:51 AM
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